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What will be the net effect on profit for next five years

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Reference no: EM132527342

The manager of Big Mac Ltd is considering the purchase of equipment to make hamburgers that will reduce annual operating costs by $1500. The equipment will cost $6000 and will have a useful life of five years with no resale value. The new equipment will replace equipment purchased five years ago at a cost of $10 000, that has a book value of $5000 and no resale value.

Question 1: What will be the net effect on profit for the next five years in total if the new equipment is purchased? (Ignore tax effects.)

Reference no: EM132527342

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